Asahi Group Holdings
Corporate History & Strategy

The prewar Japanese beer market was an oligopoly dominated by Dai Nippon Breweries, which held approximately 77% market share following the three-company merger of 1906. With major brands 'Sapporo,' 'Yebisu,' and 'Asahi' under its umbrella, competition was limited to Kirin Beer alone.

After the war, GHQ pursued the elimination of market concentration as part of economic democratization, and Dai Nippon Breweries was designated for application of the Excessive Economic Power Deconcentration Act. Its monopolistic position in the beer market—a consumer staple—was deemed problematic, and a policy of restructuring the competitive environment through breakup was determined.

In September 1949, Dai Nippon Breweries was dissolved, and two companies were established: Asahi Breweries and Nippon Breweries (later Sapporo Breweries). Asahi Breweries inherited the Suita, Nishinomiya, and Hakata factories, establishing western Japan as its primary business base. The breakup was an institutional decision based on occupation policy, involving the division of production facilities and sales territories.

This breakup forced Asahi Breweries to lose its prewar nationwide network and rebuild its operations as an independent enterprise within limited geography and production capacity. The shortage of supply capacity and sales networks in the Tokyo metropolitan area, in particular, became a management challenge that persisted for decades.

After the breakup, Asahi Breweries maintained a certain presence in western Japan, but Kirin Beer established dominance in eastern Japan, and market penetration there required time. National market share shrank significantly compared to the Dai Nippon Breweries era, becoming the starting point for the entrenchment of competitive disadvantage.

On the other hand, the breakup brought freedom of independent decision-making. Rather than operating as a division of a massive organization, the conditions were established for independently designing investment decisions and business strategies suited to market conditions. This freedom became the organizational prerequisite that enabled the discontinuous strategic transformation symbolized by the later introduction of Super Dry.

In the early 1950s, Asahi Breweries operated with beer as its core business, but faced constraints from post-breakup distribution network imbalance and declining market share. In the beer market, price competition and capital investment competition intensified, and concentration on a single category amplified earnings volatility.

Meanwhile, demand for Western spirits was recovering alongside postwar reconstruction, with whisky consumption expanding particularly in urban areas. However, in the whisky market, Suntory had secured brand recognition and distribution through early investment, and for Asahi Breweries to enter independently would have entailed high risks in terms of capital investment, aging periods, and distribution network development.

In August 1954, Asahi Breweries decided to take a capital stake in Nikka Whisky. Nikka possessed authentic whisky production technology and aged spirit inventory, but faced constraints in sales capacity and capital reserves. The partnership was premised on a complementary relationship combining Asahi Breweries' sales network with Nikka's production capabilities.

This decision represented a choice to pursue market entry through collaboration with an external partner rather than in-house vertical integration. Given that whisky is a business requiring long aging periods and extended capital recovery timelines, the partnership enabled suppression of initial investment and business risk while pursuing gradual expansion of the alcoholic beverage portfolio.

The partnership with Nikka gave Asahi Breweries a foothold in alcoholic beverage categories beyond beer. Since it was not a standalone business launch, the pace of market entry was limited, but market learning became possible while keeping capital risk contained.

This partnership became the prototype for later alcoholic beverage portfolio expansion in the Asahi Group. The concept of breaking away from sole dependence on beer and expanding business domains by incorporating external expertise is consistent with the M&A strategy from the 2000s onward.

In the late 1950s, Japan's beer market was expanding with demand centered on urban areas, with the Tokyo metropolitan area and the Kansai region becoming the largest consumption zones. Asahi Breweries' production and sales bases were skewed toward western Japan due to the post-breakup effects, constraining supply capacity in the Tokyo metropolitan area.

Meanwhile, Kirin Beer was expanding facilities centered on the Tokyo metropolitan area, leveraging volume and stable supply to increase market share. In the beer business, factory placement close to demand areas determined logistics efficiency and sales effectiveness, making capital investment not merely a question of production capacity but a competitive battle over regional market share.

In May 1962, Asahi Breweries constructed a new factory in Omori, Tokyo. This was a forward-positioning investment aimed at leveraging the location's direct connection to the Tokyo metropolitan market to shorten transportation distances and enhance supply responsiveness.

In response, Sapporo Breweries countered by establishing a new Osaka factory in the Kansai region—Asahi's home territory. While Asahi forward-positioned in the Tokyo metropolitan area, Sapporo strengthened supply capacity in the Kansai market, creating a dynamic where each company targeted the other's key market. Capital investment escalated into a nationwide competition over facility placement.

The operation of the Omori Factory partially alleviated Asahi Breweries' supply constraints in the Tokyo metropolitan area, enabling the company to reduce lost sales opportunities. However, as companies repeatedly made competing investments, supply capacity expanded at a pace exceeding demand growth.

The facility investment competition of this period became a precursor to the overcapacity structure that would later emerge in the beer market. Asahi Breweries' share fell to third place in the industry in 1963, and the reality that the gap with Kirin could not be closed through volume competition became increasingly clear.

In the 1970s Japanese beer market, Kirin Beer expanded its share centered on the household market, establishing a dominant position. The background to Kirin—which had been third before the war—seizing the initiative lay in the dispersal of Asahi and Sapporo's forces through the breakup of Dai Nippon Breweries, and in the fact that postwar demand expansion was driven primarily by household consumption.

Asahi Beer and Sapporo Breweries, continuing from the prewar era, had the commercial-use market as their primary battleground. After the breakup, the two former Dai Nippon Breweries companies competed in the same market, resulting in delayed response to the rapidly growing household market, and the gap with Kirin continued to widen.

While maintaining a certain presence in urban areas, the company's disadvantage in regional markets became entrenched, and its stagnation in both market share and profitability became prolonged. Net profit margin stood at just 0.6%, and there were no prospects for improving the beer business's earnings structure.

Sumitomo Bank, Asahi Beer's main bank, took issue with this situation. In 1976, Naomatsu Nobumei, who came from Sumitomo Bank, had been appointed president, but neither performance nor market share had recovered. In 1982, Sumitomo Bank decided to overhaul the management structure itself and proceeded with a change in top leadership.

In March 1982, Tsutomu Murai, a former deputy president of Sumitomo Bank who had experience in management turnaround at Mazda, was appointed as representative director and president. Murai framed Asahi's stagnation not as a problem of product competitiveness or sales tactics, but as a problem of organizational decision-making and behavioral patterns.

Correcting market perception became the first point of discussion. The reality that household consumption accounted for approximately 70% of Japan's beer consumption was reexamined, and it was clearly established that share recovery was impossible through the commercial-use segment alone, where Asahi had strength. How to be chosen by consumers who make purchasing decisions at home was set as the central management challenge.

Under the Murai regime, alongside the shift in market perception, organizational operations were also reformed. Sales force activity levels and target-setting were reviewed, and personnel development was advanced through the establishment of training programs. Drawing on his turnaround experience at Mazda, Murai established 'strengthening the fundamentals and earning by walking' as the organization's basic policy.

These efforts did not immediately reverse performance, but they formed the foundation for changing the organization's attitude toward the market and its way of operating. The decision to begin the turnaround not with product competitiveness or advertising but with changing the quality of organizational behavior established the conditions for absorbing the later strategic transformation.

In 1986, Hirotaro Higuchi, also from Sumitomo Bank, assumed the presidency, and the product strategy of Super Dry was layered onto the organizational foundation that Murai had built. The 1982 management support is positioned not merely as a bank-led restructuring, but as the starting point that rewrote the competitive posture of Asahi Beer itself.

In the mid-1980s, Japan's beer market was stable under a licensing system and oligopolistic structure. The tastes of major manufacturers had converged to the point where brand identification was difficult in blind tastings. This situation created a structure where companies with capital strength and distribution networks could easily maintain their advantageous positions.

Under this structure, Asahi Beer faced prolonged stagnation. Its domestic market share stood at just 9.6% as of 1985, placing it in a latecomer position in the household market. Its distribution coverage rate in Tokyo was only 47%, indicating constraints on the distribution front as well.

There were no prospects for halting the share decline through an extension of existing approaches, and the recognition that a discontinuous choice capable of changing the market structure itself was necessary had become the management premise.

In March 1987, Asahi Beer launched 'Asahi Super Dry.' The core of the decision was the direct redefinition of taste as the axis of competition. The company reviewed the conventional practice of technician-led taste determination and conducted consumer surveys of approximately 5,000 people. From 12 prototypes, the taste characterized by 'crispness' and 'sharpness' that received the highest consumer ratings was adopted.

This choice carried the risk of existing customer defection, but a 9.6% market share disadvantage conversely meant there was little position to defend. In a homogenized market, the judgment that the cost of maintaining the status quo was greater than that of pursuing a discontinuous transformation took priority.

Simultaneously with the launch, concentrated investment was made in advertising and sales promotion. Advertising and promotional expenses in 1987 reached approximately 57 billion yen, with part of the funding sourced from financial investment returns generated during the late 1980s. The decision was made to pour funds into brand penetration all at once rather than securing short-term profits.

Super Dry elicited a response far exceeding expectations immediately after launch. Against an initial annual plan of 1 million cases, actual results reached approximately 13.5 million cases, and first-year revenue expanded to approximately 86 billion yen. From the test sales stage in Tokyo, inquiries from other regions flooded in, making supply augmentation an urgent priority.

Concentrated investment in advertising and promotion rapidly increased distribution coverage and consumer awareness. Coverage expanded from 47% to 99.8%, and restaurants saw a surge in orders specifically requesting Super Dry. By 1989, market share recovered to 24.9%, and the company rose to second place in the industry.

Competitors also introduced similar products, but with large existing customer bases, it was difficult to completely switch the taste of their flagship brands. The paradox that the size of one's customer base constrains decision-making freedom structurally protected the first-mover advantage of Asahi. Super Dry stands as a rare example of rewriting the share structure in a mature market.

In Japan's soft drink market, the introduction of new products was commonplace, while creating 'mega brands' capable of maintaining stable sales over extended periods was extremely difficult. Only a limited number of standard products could permanently secure shelf space, and only a few companies possessed multiple brands exceeding 30 million cases annually.

Asahi Group HD had 'Mitsuya Cider' and 'Wonda' in its portfolio, but the beverage business as a whole had a thin layer of mega brands, posing challenges in terms of business stability and growth potential.

As the alcoholic beverage business entered a mature phase, soft drinks were positioned as a growth pillar alongside overseas expansion. Rather than accumulating incremental new product development, a fundamental strengthening through the acquisition of brands already established with consumers was required.

In October 2012, Asahi Group HD acquired all shares of Calpis held by Ajinomoto for approximately 92 billion yen. The enterprise value was approximately 84 billion yen, with an EBITDA multiple of approximately 9 times, making it one of the largest domestic beverage M&A transactions.

What Asahi valued was Calpis's overwhelming brand recognition and its monopolistic position in the difficult-to-imitate category of lactic acid beverages. With over 90 years of history, Calpis was a standard product unlikely to be drawn into price competition, generating stable cash flow independent of short-term hits.

After the acquisition, rather than immediately integrating with Asahi Soft Drinks, a policy of maintaining independent brand operations was adopted for the time being. While pursuing synergies gradually in product development, logistics, and raw material procurement, an integration design that would not damage the brand's uniqueness was chosen.

The acquisition of Calpis strengthened Asahi's domestic beverage business in both scale and quality. In terms of revenue, it surpassed ITO EN and secured the third-place position in the beverage industry as a standalone entity.

The more important change was the improvement in business structure stability. Calpis was a mega brand unlikely to be removed from shelves, providing a foothold for breaking away from a revenue structure dependent on new products. The acquisition of a standard product resistant to seasonal fluctuations and trends enhanced the predictability of the beverage business's cash flow.

This acquisition was a move that strengthened the domestic base through an approach different from overseas M&A. By concentrating management resources on a brand already established with consumers, it is positioned as a symbolic transaction in Asahi's business portfolio restructuring—an M&A that elevated the quality of the business rather than simply expanding scale.

From the 2000s onward, Japan's beer market entered a phase where volume growth was difficult to expect, against a backdrop of population decline and diversifying consumer preferences. Asahi Group HD maintained high profitability centered on 'Super Dry,' but its revenue structure was heavily dependent on the domestic market, constraining medium- to long-term growth potential.

In the global beer industry, restructuring through large-scale M&A was advancing rapidly. In 2016, Anheuser-Busch InBev's acquisition of SABMiller further concentrated the global market, making it unrealistic to compete with the largest player on volume. A clear positioning centered on premium brands was required of mid-tier manufacturers.

For Asahi, global expansion centered on premium brands, rather than volume competition, emerged as the only realistic growth strategy.

In 2016, Asahi Group HD decided to acquire the European beer operations that became available for sale as part of AB InBev's acquisition of SABMiller. In October of that year, it acquired western European operations including Italy's Peroni and the Netherlands' Grolsch, and in March 2017, it completed the acquisition of Central and Eastern European operations in the Czech Republic, Poland, Hungary, Romania, and Slovakia. The total investment reached approximately 1.2 trillion yen, an unprecedented scale for overseas beer M&A by a Japanese company.

This acquisition aimed not at simple scale expansion but at the wholesale acquisition of a business base centered on premium brands. Peroni Nastro Azzurro and Pilsner Urquell each possessed strong brand power and high market share in their respective countries, with structures resistant to price competition.

By acquiring brands, talent, and distribution networks as an integrated package, the decision was made to secure a European business base in one stroke that would have been difficult to build independently.

Through the acquisition, Asahi secured a stable revenue source in Europe that did not depend on volume growth. The Central and Eastern European operations, in particular, were structured around local brands with high market share in each country, with high EBITDA margins. Asahi's overseas revenue ratio rose significantly, and structural departure from domestic dependence progressed.

The European operations also carried significance beyond being a mere revenue source, serving as a testing ground for global expansion. The brand management expertise cultivated during the SABMiller era became an important asset when considering the European rollout of Super Dry and horizontal expansion to other regions.

The 2016 European acquisition is positioned as a move that pivoted away from dependence on the mature domestic market and established the prerequisites for global expansion of premium beer.

Since 2009, Asahi Group HD had been gradually entering the Australian alcoholic beverage market through acquisitions. While building a certain earnings base centered on premium beer and RTDs, the business scale remained limited, with EBITDA levels lagging behind the European operations.

Meanwhile, AB InBev, the world's largest brewer, had taken on massive debt following its 2016 acquisition of SABMiller and was compelled to improve its finances through asset sales. Following the sale of European operations to Asahi, the Australian operations also became a divestiture target. The Australian beer market, while mature, possessed high profitability centered on the commercial-use segment, presenting Asahi with an opportunity for scale expansion.

AB InBev's urgency to sell due to financial constraints gave Asahi, as the buyer, a negotiating advantage. With the seller's circumstances as a backdrop, conditions were ripe for the wholesale acquisition of a high-margin business.

In June 2020, Asahi Group HD completed the acquisition of Carlton & United Breweries (CUB), AB InBev's Australian operations. The acquisition price reached approximately 1.17 trillion yen, making it an overseas M&A on par with the European acquisition in scale. CUB held approximately 50% of the Australian beer market and possessed a robust distribution network in the commercial-use segment.

The acquisition aimed to clarify a three-pillar structure of Japan, Europe, and Australia, and to elevate the Australian operations to an earnings base on par with the European operations. The existing Asahi Premium Beverages and CUB operations were integrated, commencing unified operations as the new Carlton & United Breweries.

A brand portfolio spanning from super premium to mainstream was constructed, with Carlton Draught, Victoria Bitter, and Great Northern joined by Asahi Super Dry and Peroni, enabling deployment across price tiers.

Integration of the Australian alcoholic beverage operations was completed within 2020, and a plan was announced to generate over 10 billion yen in cost synergies over five years through optimization of production and logistics facilities, joint procurement, and integration of indirect operations.

The Australian operations were positioned as one pillar of the global earnings base alongside Europe, further increasing Asahi's overseas business ratio. With the establishment of the three-pillar structure across Japan, Europe, and Australia, both earnings stability through geographic diversification and mutual deployment of the premium strategy became possible.

Following the 2016 European acquisition, this transaction effectively completed Asahi Group HD's transformation from a domestically dependent earnings structure to a global premium beer maker. The strategy of successively acquiring high-margin businesses by leveraging AB InBev's financial constraints presented a growth model for Japanese food and beverage companies facing mature domestic markets.